You said it best Mag

Well, #$@%!

I added the emphasis.....

Who knew?

oh for fuggers sake.

If you ever need an example of 'herd mentality' look at the stock market.

This may be dumb because i dont know alot about banks but what will happen to credit unions if this happens?

I wish the government would get the Nationalization over with already. The preliminary bank stress test results were leaked. Stick a fork in Citibank and Bank of America, they are done.

"Investors [...] are fleeing to U.S. Government bonds and gold, which rose to above $1,000 an ounce."

Suddenly being an anti-FED, Alex Jones-esque survivalist doesn't seem so out there.

These people are ridiculous. The government provided these companies with 5% interest loans to offset losses from "toxic" assets. If the banks get any money from those assets, it's a plus. If they get nothing, the government money shields them from losses. Honestly it is beginning to look as if banks and traders are purposely creating gloom and fear in the hope of getting more cheap money out the government.

Bank nationalization has become a possibility because the market fears that it's a possibility. The more they worry and act on those worries, the more likely it becomes. I think zentex sums it up nicely.

It will be very hard to un-nationalize (re-privatize) the banking system if it goes that way. Just look at the troubles faced by modern industries in South America in post-dictatorship countries.

Trouble is, once banks are nationalized, what's next?

I agree, well, #$@%.

Confidence drives the market. Obama, Pelosi and the other pork merchants don't inspire confidence.

@ZaharMacula:

I'm pretty sure all credit unions are privately owned, and are definitely not FDIC insured. Basically, the government shouldn't have any influence in credit unions' affairs beyond interest rates.

Greenspan isn't a republican anymore in my book...

and #$@% me I should have been buying me some gold, *facepalm*

So do all the bank employees get fedeal benefits if the banks are nationalized?

@BlackMage is doing the Time Warp agaaaaaaain!!!:

Well, they are insured by the NCUA. I don't know much about it, but it sounds like the same basic principle as FDIC, but for Credit Unions. Hopefully the government stays away from them - I a member of two.

@Plates:
They don't want to inspire confidence in the free market. Obama admits that he was fond of all the Marxist/Socialist groups in college.
Have any of you ever heard him mention a free market solution to anything? Has he ever given credit to the free market for doing anything?
You have to be an idiot to not realize that jobs are created in the market, by the market, and for the market. Jobs are not created to help the employees, they are created to help the people that put up their own money to start a business.

Obama just wants you to rely on the government for everything, thus enhancing his power.

EJECT! EJECT! EJECT!

Or the financial equivilent thereof.

I have a hard time believing that the government is going to nationalize the major banks (Citi, BOA, possible Wells). There's been a number of articles arguing both sides of this over on seekingalpha.com, but I firmly believe that the government pushed BOA into making the Merrill purchase and that they're going to continue to receive preferential treatment.

Disclosure: I do hold BOA stock.

I'll start the run. All my millions are currently being secretly wired from my BofA accounts to, well, my mattress. It offers better interest rates, anyway.

This sucks. Thought BofA was to big to fail. There will be only one giant left to fail after this - the Federal government. Start saving your tea bags so we can throw them in the harbor!

@jsbeagle:

CU's are filling the void with bank lending, but their applications are down. One bad thing is that they do use a 'bank' of sorts for their excess deposits. Guess what this 'bank' did with their deposits? They invested in sub-prime mortgage securities. Now the NCUA is charging CU's a fee to help bail out their bank. Unfortunately, this fee would most likely reduce the working capital of credit unions and force mergers, liquidations, and reduced lending. Not good.

So, basically, if the markets WEREN'T panicking like scared bunnies, these banks probably wouldn't be nationalized.

@ZaharMacula: Many credit unions should be safe and sound, imo.

But certainly, there's nothing ruling out the credit unions in a poor position.

@Plates: Confidence was destroyed by the banks. The U.S. government provided them with loans to offset their losses. The problem is fixed. Anyone claiming it is not just wants to scare the government into giving more cheap loans.

@Corporate_guy: Sadly, the government is more than willing to oblige.

If you want the markets to stabilize....then you will need to enforce communism and censorship.

The pussy investors are causing this.....
If someone sneezes too loud they sell....

Shut down the news service for 1 month....and you will see a comback immediately...

Hey, this is great...we've erased everything that happened in the stock market during the bush years. Now can we erase everything else that happened?

@Dan Seitz: Sure, its a self fulfilling prophecy. Rumor gets out about insolvency and a lack of capital, there is a run on the bank and everyone moves their money resulting in, well, a lack of capital. Whammo, failure.

@jsbeagle: Slavish devotion to free market principles are what got us here. You can't drive a car out of a ditch the same way you drove it in.

What's sad is if we'd allowed a little more government regulation in the past, we wouldn't need such a massive intrusion of government into the markets now. The anti-regulation crowd shot themselves in both feet and then just kept pulling the trigger until the clip was empty.

@speeddaimon: I think you're right. Nationalization, even temporary, is just too politically untenable. Unfortunately, that means we'll get something pseudo-nationalized which is less efficient than either a fully private or fully nationalized entity. No doubt the risks will all be borne by taxpayers while private bond holders get all the upside.

@concordia: I really don't understand people who go into gold under these conditions. Treasury bills, sure, but gold? On average it barely matches the rate of inflation; it's a lousy investment. It's also in the midst of a decade-long run-up in prices which looks suspiciously like a bubble.

Gold doesn't even make sense from a survivalist standpoint. You can't eat it or burn it or do anything useful with it. It's only valuable because we've decided it is, based on its rareness and beauty. In a real disaster scenario it's not going to be as valuable as barter goods.

@holocron: I still like Bush! It *does* look like the market did pretty well during his years in office...

Disclaimer: I'm ig'nert about economics :)

Gold above $1000! Now my Cash For Gold package is worth even more!

@Xerloq: No, not really. During the Savings & Loan crisis of the 1980s and 90s over 700 S&Ls became insolvent and were taken over by regulators. "Taken over by regulators" is nationalization by another name.

As part of the process, a special government entity called the Resolution Trust Corporation was formed. The purpose of the RTC was to dispose of, i.e.:liquidate, the assets of the failed S&Ls. And that's exactly what they did. They sold, or "un-nationalized" if you like, the assets to private parties over a period of several years. Ergo, re-privatizing is not hard; it has been done before.

Lastly, no one is talking about a governement takeover of the banking system. What is being discussed is the takeover of a handful of large banks. Make no mistake, the banks in question are already functionally insolvent. They would already be bust if not for the capital infusions the Fed has already provided, plus the implicit guarantee of more taxpayer money. Put it this way: the package is already wrapped up. Explicit nationalization is just putting the bow on top.

Watch the freakout when the Dow hits the 50% mark - 7000. Dow broke 14000 in July 2007.

@JiminyChristmas: The popular term for these has become "zombie banks." They're still walking around, but they're actually dead.

This is a pretty damaging situation to allow to persist. First off, these banks are absorbing bailout money but aren't putting much of it back into the economy. Secondly, the temptation for management to take a potentially expensive "hail Mary pass" type action to try to save the bank is high; if your institution is already doomed, why not try to rescue it with a risky last-ditch effort?

@Corporate_guy: Yes, its a bit of their own fault. We loaned them lots of money and they just sat on it and paid themselves lots of money. They were supposed to lend the money (not stupidly, mind you) to those who are appropriately qualified. Instead, they're having a hypothermic reaction and letting themselves slowly die.

@starrion:
Stock Market: I got a problem here.
Biggs: Eject!
Stock Market: I can hold it.
Biggs: Pull up!
Stock Market: No, I'm all right... ahhh!
[Stock Market explodes in a ball of fire]

@jsbeagle: Yeah, that Obama -- so silly for thinking that laissez-faire conservative government and the unfettered free market causes economic problems. Think about how awesome the economy was after 12 years of conservative policies in 1992 and after 8 years in 2008!

@Plates: Nice try. Yes confidence is a component of the market, but if the fundamentals are bad, no amount of confidence is going to get you out of it. That's how we got in this mess in the first place, lots of confidence, no fundamentals. Eventually the charade ended and people realized how buggered we are. Obama is just trying to figure a way out. We can disagree on what the best way is, but don't say this is all Obama's fault.

@laserjobs: Yup. The Fat Lady has sung. The b*tch is yammering for way too much cab fare to get home than she's worth. Let the other shoe drop, nationalize them now so we can get a real look at their books, force their write-downs, infuse them (sigh, for a third time) and then spin them out and (hopefully) get (most) of our money back.

@speeddaimon: I would believe it. Citi's current market cap is about $11billion. The US government has put over $50billion in bailout funds into Citi since November 2008. Seems to me the government already owns Citi. Same deal with BofA, market cap = $17billion, bailout funds = $45billion.

@Plates: Yup, nothing to see here and the Finanapocalypse is a figment of The Daily Kos' imagination.
So, you're going to do the heroic, non-herd thing and buy up bank stocks with your own money? Put your money where your mouth is?

@holocron: Damned straight: I'm sure the current administration will have no problem erasing the security policies which kept the country safe from terrorist attacks throughout the post-911 Bush years.

@David Brodbeck: The problem is ideology. The concept that all government regulations are bad and privatization is always the best choice is part of the reason we got here. So even when someone presents reasonable regulations to prevent or mitigate, there's an ideological reaction to oppose it rather than consider what its trying to accomplish and if there's a there's better way to do it.

@lodleader: Yup. Because he actually allows facts on the ground to affect his previously faith-based thinking and admit his previous schema was fanciful. Too bad he had to destroy the global economy before he could admit he was wrong.
Critical thinking is definitely something that will get you booted from the Republican club. Thanks for admitting it, though!

@Xerloq: Therein lies my aversion to the current stimulus/bailout regimen: there are no sunsetting controls on all of the new spending and programs. If we need to, in the short term, pump up the banking industry, and the only way to effectively and quickly do this is to nationalize the banks, so be it. But such an undertaking should be, to borrow a phrase, "targeted, timely, and temprorary"

@David Brodbeck: A decent percentage of survivalist/chicken little sites run ads for gold investments. Sure, some of the things they say ("be prepared") make sense, but one has to wonder what is with the gold pushing.

@David Brodbeck: @David Brodbeck: Actually yes the free market can get us out of this ditch - market's self-correct, but it requires a span of time to do it. Unfortunately since the amount of time required to bounce back from a systemic collapse of the credit market is longer than an election cycle, our spineless idiot politicians in both parties would rather do something for the appearance of doing something than let the market fix itself.

How would have Government regulation prevented this problem in the first place? I hear a bunch of wankers bleat this line of "OMG DEREGULATION DID THIS" without any coherent, specific answer for how regulation would have stopped investors and bankers from blowing cash into bubble, a bubble started by the Fed slashing interest rates in the wake of 9/11 and the .com bust. Wait, isn't the Fed supposed to be a regulatory body?

Idiocy caused the credit crisis, and no amount of regulation on Earth can eliminate any and all idiocy from a human activity, especially if it's regulation written by politicians who are even bigger idiots than the financiers are.

@tripnman: Yeah, but the problem is is that they are insolvent. At least when you look at potential losses measured against actual assest. And that is noone's fault but the banks.

FFS. Don't nationalize the damn banks, get rid of the ones that did stupid shit and recover from this instead of prolonging the inevitable. For heavens sake!